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3_service_area_competitor_analysis.docx3 Service Area Competitor Analysis
“Natural competition is evolutionary.
Strategic competition is revolutionary.
Natural competition is wildly expedient in its moment-to-moment interaction, but is inherently extremely conservative in its change.
Strategic competition is deliberate, carefully considered, and tightly reasoned in its commitments but the consequences may be radical change in a relatively short time.”
— BRUCE D. HENDERSON
Introductory Incident
Medical Tourism Complicates Service Area Analysis
Nearly a half-million people were medical tourists in 2012, according to Patients without Borders, a consumer advisory service that expects the number to grow about 25 to 35 percent next year.1 Medical tourism is “the practice of travelling to another country with the purpose of obtaining
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health care (elective surgery, dental treatment, reproductive treatment, organ transplantation, medical check-ups, and so on). Medical tourism is estimated to be 2 percent of world tourism and about 4 percent of hospital admissions in the world.2 The term “medical tourism” is evolving based on increasing specialization and heterogeneity in services, thereby leading to the use of more specific terms such as reproductive tourism, organ transplant tourism, abortion tourism, and so on. It excludes health or wellness tourism which generally refers to all the non-invasive (external) treatments including visits to spas, homeopathy treatments, or traditional therapies that improve the health or the mind of the patient.3
Health care consumers today are concerned with the cost of medical treatment because of high copays, percentage of cost to be paid by an employee, and in some cases, loss of insurance through unemployment. Bumrungrad International Hospital (Bangkok), one of the largest facilities, attracts more than 400,000 international patients per year, primarily because many of its 900 doctors completed US fellowships or residencies, around 200 are US board-certified, and nearly all speak English. At Bumrungrad a laminectomy (spinal surgery to relieve the pressure on a nerve) costs $4,700 (including a 5-day stay in a private room) versus a US quote of $70,000 and higher. A coronary valve replacement and bypass surgery in Taiwan is $18,000 compared with the US cost of $85,000. India is a top destination for orthopedic and heart surgeries (16 hospitals have already received International Joint Commission accreditation and the Indian government has introduced the “M” visa for those engaged in medical tourism). In Singapore English is widely spoken, many medical professionals are US- or UK-trained, and a number of hospitals are accredited by US agencies. Singapore is known for cancer diagnosis and treatment. Israel is emerging as a popular destination for in vitro fertilization and Latin America (already the cosmetic surgery destination of choice) is becoming known for its dentistry.4
The primary factors driving the cost differential in many medical tourism destinations are lower labor costs, no malpractice insurance costs, and lower pharmaceutical costs. Of course, each of these factors suggests additional risks such as quality of care, counterfeit medications, and security and purity of blood supplies. The main risk is quality of care (being alleviated increasingly by the number of global hospitals, centers, and clinics being accredited by the Joint Commission International, JCI). Although hospitals may be accredited by the JCI, other critical activities such as clinical analysis laboratories, radiology centers/departments, medical imaging and interpretation, plus the differences in malpractice laws and lack of follow-up care (including handling complications at home) may cause problems.
In the past, wealthy individuals from developing nations have tended to seek care in North American or Western European nations, but that is changing to preferences for other developing countries that have increasingly sophisticated medical technology and training but lower comparable costs. How rapidly medical tourism grows for US citizens will depend on whether insurers, employers, and the US government encourage treatment abroad. Blue Cross & Blue Shield of South Carolina was one of the first insurers to launch an initiative to allow overseas medical coverage for enrollees.5 It has alliances with Bumrungrad International Hospital Parkway Group Healthcare (owner of three hospitals in Singapore), as well as other hospitals in Turkey, Ireland, and Costa Rica. The International Medical Travel Association (www.intlmta.org) president identified
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three areas of concern that limit greater adoption of medical tourism: quality (do these hospitals offer the same quality I would receive in the USA?), liability (what happens if something goes wrong?), and continuity of care (who will be responsible for care once I return home?).6
